Why are Brazil’s banks choosing the Tezos blockchain?

Crypto computing platform Tezos has announced that its decentralised blockchain will be used by Banco BTG Pactual – Latin America’s largest standalone investment bank – and prominent Dubai-based asset management firm Dalma Capital for Security Token Offerings (STOs), including the ongoing ReitBZ STO.

According to the official announcement:

“By utilising the new platform for digital securities transactions, the financial institutions address a deal pipeline in excess of $1bn for existing and prospective token issuances – with an outlook to utilise Tezos to tokenise a wide variety of traditional and alternative investments.”

BTG Pactual entering the blockchain space

BTG Pactual was the first major investment bank to officially launch an STO when it announced in February its plans to launch ReitBZ – a token designed to enable holders to invest in the Brazilian real estate market.

The STO was launched successfully on the Ethereum protocol, but the bank intends to switch to Tezos as it sees the firm as a “global player with a robust blockchain for asset tokenisation”.

Andre Portilho, associate partner at BTG Pactual, claims the reason for the switch is down to Tezos’ ease of use when it comes to smart asset creation, including smart contracts or special token projects like STOs.

Given Tezos’ reputation and large network of users, I expect the project to be quite interesting. As an Ethereum-focused analyst and junior developer myself, I find key companies often explore different solutions that target largely regulated markets.

In my personal opinion, it makes more sense to adapt blockchain technology to regulated markets and services than the other way around. It’s hard to regulate cryptocurrencies, but it’s easy to create private or semi-private blockchains that follow current asset laws.

Tim Draper announces support

Tim Draper – a prominent Tezos stakeholder and advocate of blockchain in finance – said:

“We are excited to see BTG Pactual and Dalma Capital making use of the Tezos blockchain – we are believers in the Tezos project and see a strong use case for security tokens.”

Given the fact Tim Draper has been betting heavily on asset-focused blockchain projects like Ethereum and Tezos, we should expect quality developers to work on this particular project. Draper has been known to believe banking needs more openness, decentralisation, competition, and transparency, and it appears he’s putting his money where his mouth is.

Dalma Capital CEO and founder Zachary Cefaratti elaborated further:

“The addressable market for security tokenisation is in excess of $268 trillion, which is composed of the global stock of investable financial assets. This is the next iterative step in the pervasion of blockchain in finance. We see future development in addressing the $595 trillion global derivatives market on blockchain.”

If this project works out, I expect more companies to follow the STO route as it gives them an easy way to access brand-new digital technology that empowers users more than middlemen.

Hopefully, other Brazilian banks and companies will follow BTG Pactual’s steps and jump on the blockchain wagon.